For fans of Amazon (AMZN) — and there are plenty of them — or followers of the Overstock (OSTK) saga, the past several days have been all about the pricing tussle between the two companies.

Overstock announced on July 25 that it was going to beat Amazon’s prices on select books by 10%. Amazon immediately responded by lowering prices on those same titles to match the newly lowered Overstock.com prices.

It only took a matter of hours for the market to frame the debate as an escalating price war between the two companies … and arguing who would win. But that was a big mistake.

In so doing, investors were distracted from the fact that, in so many ways, Overstock has already pulled ahead of the dominant name in e-tailing.

Last Quarter’s Results a Microcosm

Just as a refresher, Overstock ramped up profits in a major way last quarter, from 2 cents per share in Q2 from 2012 to 15 cents this time around. Sales were up a solid 22%. Amazon also saw its sales grow by 22% on a year-over-year basis, but that’s the extent of the similarities.

Rather than posting the expected profit of 5 cents, Amazon lost 2 cents per share, down from the 1 cent per share the e-tailer earned in the year-ago period. It was the third loss in a row, and underscores something that’s been evident for a while: Amazon’s constant heavy spending and low margins are finally catching up with the company.

Not that the market cares. Shares of AMZN reached new all-time highs despite the shortcoming, largely fueled by — no surprise — an encouraging outlook.

To be fair, Overstock shares have done well too, advancing more than 350% during the past 12 months to reflect the underlying corporate success. But it must be maddening for Overstock’s management, though, seeing traders reward Amazon for what would be considered failure for any other company, while OSTK created profitable success rather than continuing to whittle away net margins.

Thing is, last quarter’s relative strength or weakness aren’t new or surprising. But the oddly long grace period Amazon has been granted by the market might truly and finally be ending … revealing Overstock.com as the better opportunity within the online-retailing arena.

Let’s Compare

While Amazon is clearly the category leader for online retail, it has gotten into the bad habit of spending — heavily — to win new business. What was spent to develop the Kindle Fire and all those new warehouses should have made a measurable positive impact by now. But they haven’t. Instead, net margins have fallen steadily from an already paper-thin 2% in early 2011 to nil as of Q2.

Supporters of the company will rightfully point out that a company has to spend money now to make money later. But, with quarterly capex growing — reliably — from less than $100 million in 2004 to more than $800 million last quarter (with no end in sight), the critics can also rightfully ask “How much spending is it going to take before getting to the promised land?”